Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Pharoah Inc. manufactures snowsuits. Pharoah is considering purchasing a new sewing machine at a cost of 32.45 million. Its existing machine was purchayed 5 years

image text in transcribed
image text in transcribed
Pharoah Inc. manufactures snowsuits. Pharoah is considering purchasing a new sewing machine at a cost of 32.45 million. Its existing machine was purchayed 5 years ago at a price of $1.8 million; six months ago, Pharoah spent $55.000 to keep it operational. The existing sewing machine can be sold today for $240,275. The new sewing machine would require a one-time, $85,000 training cost. Operating costs would decrease by the following amounts for years 1 to 7 : The new sewing machine would be depreciated according to the declining balance method at a rate of 2006 . The salvage value is expected to be $380,500. This new equipment would require maintenance costs of $94,900 at the end of the fifth year. The cost of copital is 9/2. Click here to view the factor table. Ure the net present value method to determine the following: (lI net present volue is neyative then eater with negative sign preceding the number e. 45 or parentheses e.g. (45). Round present value answer to 0 decimat ploces, ey- 125 . For Calculation purposes, use 5 decimal places as disployed in the factor toble provided.) 567432,400435,500436,300 The new sewing machine would be depreciated according to the declining balance method at a rate of 200 . The alvage value is expected to be $380.500. This new equipment would repuire maintenance costs of $94,900 at the end of the fith veak, The cost of capital is 9%. Click here to view the factor tablet. Use the net present value method to determine the following: (If net present value is negative then enter with negative isgn preceding the number e... 45 or parentheses e.9. (45). Round present value answer to 0 decimal places, es. 125 . For calculation putposes, use 5 decimal places as displayed in the factor table provided) Calculate the net present value. Net present value 5

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions